The gross margin of China Mengniu Dairy Co and its subsidiaries widened to 39.6 percent, an increase of 2.4 percentage points year-on-year, Mengniu said at its 2024 annual results announcement on Thursday.
Mengniu’s operating profit margin rose to 8.2 percent, a 1.9 percentage-point increase from last year, because of the company’s lean operation amid industry turbulence in 2024, with an operating profit of 7.3 billion yuan ($1 billion).
However, Mengniu’s revenue dropped 10.1 percent to 88.7 billion yuan, because of weak consumer demand in the dairy industry.
Net profit also fell in 2024, as a result of the impairment of goodwill and intangible assets from Bellamy, a subsidiary of Mengniu, as well as a goodwill impairment and additional impairment costs associated with Modern Dairy, a joint venture.
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Mengniu said that despite the negative impact on net profit, these adjustments have enhanced the company’s stability and improved the visibility of Mengniu’s sustainable and healthy development.
To reward long-term investors, Mengniu said it plans to distribute a total cash dividend of approximately 2 billion yuan for the 2024 fiscal year. A final dividend of 0.509 yuan (7 cents) per share in 2024 was recorded, with the dividend payout ratio rising to 45 percent.
“In the new year, driven by favorable national policies such as boosting consumption, demand for dairy products is expected to steadily recover, and the contradiction between supply and demand in the industry should improve,” said Gao Fei, CEO of China Mengniu Dairy Co.
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“Mengniu will strengthen its six core businesses, including normal temperature milk, low temperature milk, ice products, fresh milk, milk powder, and cheese, and accelerate to create a nutrition and health platform and an overseas platform. Based on the value of ‘consumers first’, we will guide consumers to drink milk, drink good milk and drink the right milk,” Gao said.
